RISMedia's Real Estate Magazine

OCT 2018

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/1032371

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Page 111 of 134

RISMedia's REAL ESTATE October 2018 107 to commercial deals when the mar- ket started to favor that sector in the mid-2000s. With a practice that's now mostly commercial, Lo- pez cautions brokers about making the transition willy-nilly. Perhaps the biggest concern, he explains, is that it might be il - legal to represent a commercial client without fully understanding the business. In his state, as in many others, brokers on commer - cial transactions have to sign off on a "Duties Owed By A Nevada Real Estate Licensee" document, which can hold the broker liable if they don't exercise "reasonable skill and care." In other words, it's illegal to not know what you're do- ing—and with bigger commissions come bigger liabilities. "People are trying to do commer- cial, but they don't have the right training, knowledge or education," says Lopez. "Homes are very differ- ent from income-producing assets. You never get a buyer looking at a home and asking, 'How much power is coming into this house?'" Wattage, plumbing, insurance and zoning are among the many variables that need to be researched on the back-end of a commercial real estate transaction, says Lopez. To get up to speed on the relevant issues and lingo, he recommends reaching out to a training institute, such as CCIM, and/or partnering with a local com - mercial real estate specialist on your first few deals to learn the business and make sure you're covered from a liability standpoint. "It's probably best to refer a com- mercial real estate lead to a spe- cialist…but work close with them to learn the ropes," Chou advises. "That's the best approach to start. It's a learning process for sure. You can't just dive into it." In addition to the technical con- cerns that exist exclusively in com- mercial real estate, residential bro- kers also have to learn the nuances of negotiating these highly complex transactions. Many of the details that need to be ironed out by the bro - ker may not even relate to the cur- rent state of the client's business, but, rather, the future objectives. "The negotiation is a lot more complicated," says Chou. "It's not just about price. If [an office space] client wants to expand the foot - print—if they can acquire a differ- ent floor or spread into a neighbor- ing suite—there are a lot of future events that you have to be aware of. You can also negotiate for rooftop access, parking, signage and nam - ing the building." Chou adds that retail properties are a little bit simpler, but they still require a specific skillset for brokers. "Within the category of commer- cial real estate there are special- ties and subspecialties," says Bruce Ailion, a broker and attorney with RE/MAX Town and Country in Atlan- ta. "These include investment sales and property management. In invest- ment sales, someone might special- ize in office properties, apartments, industrial properties, churches or even NNN properties like fast food restaurants or gas stations. I recent- ly heard someone is specializing in car wash facilities." Ailion recommends specializing in a particular type of commercial real estate even if you're primarily a residential broker looking to dabble in it. There are many training pro- grams available, but he warns that they can be expensive and require a lot of dedication. "Knowing the market, knowing the jargon, learning how to market or acquire clients and understand - ing the concerns of tenants or sell- ers based on the property type is important. You cannot know the entire market, so specializing in a subcategory makes sense. Like - wise, the jargon and technology are different in different categories," says Ailion. "When I was starting out, I happened to get a tenant for a 100,000-square-foot warehouse. I was familiar with dock doors and drive-ins and ceiling height and beam spans, but when the tenant started asking about foundation cuts and the weight per square foot the floor could support, I was clue - less. Fortunately, the leasing agent took over and I just shook my head." With 39 years of experience in both sides of the business, Ailion says he has found a great balance of residential and commercial that can swing to a ratio of 30/70 in either direction, depending on the market demands. Having such flexibility is welcome for an industry as unpredictable as real estate. Dabbling in commercial usually begins with an easy lead, but those who have been there know that it's much harder to get to the finish line. Big companies, such as Berkshire Hathaway HomeServices, have deep resources to support those look - ing to dabble, but usually require agents to secure permission from their broker first because there are so many inherent risks, says Lopez, who has received a lot of interest in commercial from the residential agents on his team. "If they're not trained (in com- mercial real estate), they should be seeking somebody they can shadow. That's the best decision on behalf of their own client," advises Lopez. "Once you get the skills, knowledge and tools, it's an exciting career." RE Andrew King is a contributing editor for RISMedia. "People are trying to do commercial, but they don't have the right training, knowledge or education." OMAR LOPEZ Berkshire Hathaway HomeServices Nevada Properties

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